If Jeremy's budget line shifts inward in a parallel manner, what may have happened?
A) Jeremy has less money to spend on the two goods.
B) Jeremy has more money to spend on the two goods.
C) The price of both goods decreases by the same amount.
D) The price of one good decreases while the price of the other good stays the same.

Question

Quizplus · Accepted Answer

When Jeremy's budget line shifts inward in a parallel manner, it indicates that he has less money to spend on the two goods, as the shift reflects a decrease in his purchasing power while the relative prices of the goods remain unchanged.

If Jeremy's Budget Line Shifts Inward in a Parallel Manner